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Over-the-Top Video Revenue to Reach $9.45B in Europe

The total over-the-top (OTT) video revenue in Europe was up 51 percent in 2013 reaching $3.2 billion and is expected to grow a further 43 percent this year, according to the latest market study by Strategy Analytics.

They predict that the majority of this new growth will occur within the online subscription VOD (SVOD) and ad-supported video business models, lifting the market above $9.45 billion by year-end 2018.

The growth of OTT video suggests that the audience is shifting towards accessibility and availability over actual ownership of home videos on DVD or Blu-ray discs.

"Over time, consumers will shift from content ownership to lower cost means of consuming media. As long as OTT services providers continue to offer attractive video catalogs at a reasonable price, accessibility and availability will trump ownership," said Leika Kawasaki, digital media analyst at Strategy Analytics.

The success or failure of OTT video services is heavily dependent upon the quality of their content library. According to the Strategy Analytics assessment, the expansion of global players like Netflix across Europe has been slowed due to complex content negotiation impacting the quantity and quality of available content in the region. Regardless, Netflix will continue its expansion in Europe.


Drivers of OTT Video Growth in Europe

Consumers across the region are consuming more OTT videos than ever before. Broadband internet access expansion, the proliferation of connected devices, and easy extensive online video catalogs have proven to be a potent combination in driving adoption of OTT video consumption.

Key findings from the market study include:

  • Led by Netflix, SVOD revenues experienced strong growth during 2013, up 133 percent and is expected to nearly double by year-end 2014.
  • Ad-supported video makes up over 60 percent of total OTT video revenue in Central & Eastern Europe, but will represent less than 50 percent of Western Europe OTT video revenue by year-end 2014.
  • Average OTT video spend per broadband user in Western Europe is about four times that of those in Central & Eastern European.
  • From a user perspective, the European online video market is reaching maturity but from a consumption, and even more importantly, monetization perspective OTT video is just beginning to hit its stride.

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